Morgan Stanley Downgrades NetApp (NTAP) Due to 15-Year Low in IT Hardware Budget Growth

Core Viewpoint - NetApp Inc. is currently considered one of the most undervalued quality stocks, despite mixed analyst ratings and market conditions [1][5]. Group 1: Analyst Ratings - Morgan Stanley downgraded NetApp from Equal Weight to Underweight, reducing the price target from $117 to $89, citing the slowest hardware budget growth in 15 years [1][2]. - Conversely, Goldman Sachs initiated coverage of NetApp with a Buy rating and a price target of $128, highlighting specific high-growth areas within media and data storage categories [3]. Group 2: Market Conditions - A CIO survey indicated a significant slowdown in IT hardware budget growth, leading to a more defensive stance on IT hardware investments [2]. - The broader external storage market is projected to grow modestly at 4% year-over-year in 2025, but NetApp is expected to maintain its leadership in the all-flash storage market [3]. Group 3: Company Overview - NetApp provides a range of enterprise software, systems, and services aimed at transforming data infrastructures across various regions, including the US, Canada, and Europe [5]. - The company operates in two segments: Hybrid Cloud and Public Cloud [5].